International

The European Union and Electronic Databases: A Lesson in Interference?

by Barry Mahon

In February 1992 (my notes have the date as February 29 - if that is true
then it is ironic; a leap year, maybe February 29, 1996, will see a result?) the
European Commission (EC), the administrative arm of the European Union (EU), then
known as the European Economic Communities (EEC), released the draft of a
Directive which they intended would become the law of the EU by the end of 1992.
The document, "Proposal for a Council Directive on the legal protection of
databases," was designed to bring electronic data collections within the ambit of
copyright protection and to bring into line the legal protection offered to
electronic data collections in the Member States of the EU. That is the brief
description of the beginning of a process that is ongoing, an attempt by a group
of countries to bring their legislation concerning one type of electronic
information up to date.

At the end of the first quarter of 1995 when this contribution is being
written, there is no agreement on the text or even on a text which would
incorporate the requirements. This article will attempt to analyze the various
drafts of the text and the submissions of one representative body to explain how
the original ideas of the Commission were received and have been modified in
later versions.

The story starts long before February 1992. An article in the October 1990
issue of Newsidic, the newsletter of Eusidic (European Association of Information
Services), reports on a meeting attended by Eusidic representatives on April 26
and 27, 1990. The meeting was a hearing by the EC on the subject of copyright
and databases. The following conclusions, as reported by the EC, resulted from
the meeting:

All speakers indicated that databases are, in their view, protected by copyright.
This view was shared by the representatives of WIPO (World Intellectual Property
Organisation).

A large majority of participants rejected the suggestion of an alternative form
of protection instead of copyright (neighboring right or sui generis right).

Regarding the ownership of rights in the database itself, there was unanimity in
saying that the author (the person creating the database) should be the first
rightholder. A large majority believed that normal copyright rules should apply
[to the inclusion of protected works in a database]. The same rule should apply
to abstracts of protected works provided that they do not substitute for the
original protected works themselves.

Most participants expressed a desire to see a criterion of originality compatible
with the requirements of the Berne Convention and which would impose no special
requirements on the authors of databases.

So far so good you might think. But the version of the draft Directive of
February 1992 is in direct conflict with some of those opinions in some of its
proposed provisions. For example, in the very first clause of the preamble we
find the following comments:

Whereas databases are at present not clearly protected in all the Member States
by existing legislation and such protection, where it exists, has different
attributes;

whereas although copyright remains an appropriate form of exclusive right for the
legal protection of databases. . . other measures are required to prevent unfair
extraction. . . .;

whereas such protection [against misappropriation of the results of financial and
professional investment in the creation of a database] of the contents of a
database is to be achieved by a special right by which the maker of a database
can prevent unauthorised extraction or reutilisation. . .

From that you can see that the first question that many people asked when the
text was distributed was: Was the author of the text aware of the results of the
hearing? And the second question was: What is the problem to which this draft
is the proposed solution?

Giving the EC the benefit of the doubt, there were certain clarifications in
the draft. For example, databases were clearly defined as "collections" within
the meaning of the Berne Convention. What were the basic problems? Most
commentators were unhappy with proposals such as the following:

the lawful user of a database may, without authorisation of the database maker,
extract and re-utilise insubstantial parts of works or materials from a database
for commercial purposes provided that acknowledgment is made of the source
and even less happy with this one:

if the works or materials incorporated in a database which is made publicly
available cannot be independently created. . . the right to extract and
re-utilise in whole or in substantial part works or materials from that database
for commercial purposes, shall be licensed on fair and non-discriminatory terms.

In the former case they were unhappy with the vague nature of the term
"insubstantial" and in a submission to the EC, Eusidic said:

"Specifically, the definition [in the Directive] of 'insubstantial part' of a
large database is inadequate. There is a danger that even a relatively small
part, if extracted without authorisation, could be used to compete unfairly, for
example, by extraction of all recent information on a specific subject."

After much debate with EC officials the outcome was:

"Substantial shall be more than what has been accepted (in the past?) by
courts as insubstantial."

In other words there will have to be court decisions which can be quoted in
other court cases where an action is taken alleging "unauthorised extraction."

That certainly was not the extent of concern expressed about the draft. As
indicated in the box to the right, Eusidic had several substantive concerns about
the EC directive.

The Revised Proposals

The text of February 1992 foresaw that the Directive would pass through all
of its processes of examination and discussion in a period of 11 months and
become law before the end of 1992. In fact the proceedings took substantially
longer and, as stated above, are not yet completed. The European Parliament
examined the draft and held a hearing of its own in March 1993 and proposed some
changes. Finally, in October 1993 the EC produced a new draft which contained
substantial alterations to some parts of the Directive. Only those parts which
were referred to above are dealt with in respect of the new text.

In the preamble to the new draft a whole new paragraph was added as follows:

Whereas distributors of databases should make provision in their contracts as
regards the unauthorised re-utilisation of the contents of the database by the
lawful user where such re-utilisation is for strictly private purposes or for the
purposes of teaching or research, provided such re-utilisation is not carried out
for commercial purposes and does not prejudice the exclusive rights of the maker
of the database to exploit that database.

Eusidic commented:

One interpretation of this is that database owners should restrict (re)use for
private purposes but the Directive will be 'the law' concerning commercial (and
other) re-use.

Concerning the definitions of "insubstantial part" the new draft suggested two
things:

For the purposes of the term of protection provided for in this Article,
'insubstantial change' means insubstantial additions, deletions or alterations
which, taken together, do not substantially modify the contents of a database.

For the purposes of the term of protection provided for in this Article,
'substantial change' means the successive accumulation of insubstantial
additions, deletions or alterations in respect of the contents of a database
resulting in substantial modification to all or part of a database.

Concerning the compulsory license aspects, the following changes were proposed:

Notwithstanding the right provided for [in Article 10(2)] to prevent the
unauthorised extraction and re-utilisation of the contents of a database, if the
works or materials contained in a database which is made publicly available
cannot be independently created, collected or obtained from any other source, the
right to extract and re-utilise, in whole or substantial part, works or materials
from that database for commercial purposes that are not for reasons such as
economy of time, effort or financial investment, shall be licensed on fair and
non-discriminatory terms. A declaration shall be submitted clearly setting out
the justification of the commercial purposes pursued and requiring the issue of a
license.

The right to extract and re-utilise the contents of a database shall also be
licensed on fair and non-discriminatory terms if the database is made publicly
available by:

public authorities or public corporations or bodies which are either
established or authorised to assemble or to disclose information pursuant to
legislation, or are under a general duty to do so.

firms or entities enjoying a monopoly status by virtue of an exclusive
concession by a public body.

For the purposes of this Article databases shall not be deemed to have been
made publicly available unless they may be freely interrogated.

For the purposes of this Article, 'commercial purposes' means any use,
which is not:

private, personal, and

for non-profit making purposes.

In addition some new clarifications were made, of which one of the more
interesting was:

The incorporation into a database of bibliographical references, abstracts (with
the exception of substantial descriptions or summaries of the content or the form
of existing works) or brief quotations, shall not require the authorisation of
the owners of rights in these works, provided the name of the author and the
source of the quotation are clearly indicated in accordance with Article 10(3) of
the Berne Convention.

And the rational for this was given in the accompanying explanatory memorandum
as:

the clarifications to the text on limitations has been made to ensure that only
those works or materials which are not subject to copyright (references), which
do not infringe copyright in the pre-existing work (short abstracts) or which
fall within Article 10 of the Berne Convention (quotations) can be incorporated
into a database without authorisation. It is not intended that a database creator
could incorporate abstracts written by third parties into his database without
authorisation if such abstracts are themselves subject to copyright protection.

One immediate question which arose in relation to this was: What about
author abstracts? Many database producers routinely use them as abstracts in
their database.

The Political Discussion

The next stage in the examination was the political examination by the
committees of the Council of Ministers, the decision making entity of the EU.
The Council itself, the actual meetings of Ministers, normally approves texts
which have been agreed at lower levels between the EC and officials from the
Members States, meeting in committees, in which the text is examined line by
line. This process started, in theory, as soon as the new draft was issued,
because, officially, the Council should now make a decision on the Directive as
proposed, following the Parliament's examination and the subsequent
modifications. In practice this did not happen.

In the EU the Presidency of the Council of Ministers changes every six
months, with a new Member State assuming the chair. In the first half of 1994
the Presidency was held by Greece and the Greek government did not consider the
draft Directive of the legal protection of databases as a high priority item.
Despite the fact that the draft was tabled by the EC, no substantive debate took
place until the second half of 1994 when Germany took the reins.

By October 1994 the text was revised substantially. Again, concentration
will be on the elements which were controversial in the first draft, although
certain new proposals so altered the original concepts that they have to be
mentioned also.

The first "shock" was that the basic definition had been extended to cover
all collections, electronic or not. The new draft definition read as follows
(words in [ ] in the following sections are there because they are alternatives,
not yet agreed):

For the purposes of this Directive 'database' means a [collection, compilation]
of data, works or other materials [arranged, stored and (capable of being)
accessed by electronic means] [whether in machine readable or other form]
(author's italics) [and the materials necessary for the operation of the database
such as its thesaurus, index or system for obtaining or presenting information]
it shall not apply to any computer program used in the making or operation of the
database.

The article containing the proposals that extracts, quotations, etc., may be
incorporated into a database without authorisation was deleted. This had the
effect that the question about author abstracts "died."

Concerning the compulsory licensing the following text was suggested:

Notwithstanding the right provided for in Article 10 [the right to prevent
unauthorised extraction] a license for commercial, research or educational
purposes relating to the whole or substantial part of the works, data or other
materials [in a database] shall be granted if those works, data or other
materials can and could not have been created, collected or obtained from any
other source.

The person requesting the license shall undertake to add value to the works,
data or other materials thus obtained and not to have made the request for
reasons solely of economy of time, effort or financial investment.

The license shall be granted on fair and non-discriminatory terms.

Licenses shall also be granted in the same circumstances and under the same
terms and conditions by public authorities or public corporations or bodies which
are either established or authorised to assemble or to disclose information
pursuant to legislation, or are under a general duty to do so, and firms or
entities enjoying a monopoly status by virtue of a concession by a public body.

The licenses referred to in this Article shall only be granted where the
collection has been made publicly available in the sense that it may be
interrogated or examined by anyone (against payment or free of charge a suggested
addition) and the whole collection may be so interrogated or examined.

Here we have an even more specific wording than the second draft and this after
examination by the representatives of countries where substantial and unique
databases are created. One conclusion that can be suggested is that the owners
of the databases are satisfied that they can construct contracts for the use of
their products such that the provisions of the Directive would not apply.

Concerning "substantial and insubstantial," a number of "variations" were
under discussion:

Any substantial change to the contents of a database which has been [made
available to the public] [put on the market] [including any substantial change]
resulting from the successive accumulation [additions] deletions or alterations,
which would result in the database being considered to be [made available to the
public] [put on the market] as a new database, shall qualify that database for
its own term of protection

or

In the case of a database which is [made available to the public][put on the
market] and the contents of which are not deleted or altered, but to which
successive substantial additions are made, the maximum term of protection for the
original material contained in the database when it was first [made available to
the public][put on the market] shall be [50] years

or

Where paragraph 1b applies (the first option above), the term of protection for
any material which was contained in the first database when it was first [made
available to the public][ put on the market] and which is also contained in the
new database shall expire at the latest [50] years from the first of January
following the date when the first database was [made available to the public][put
on the market].

By way of derogation from paragraphs a) b) and 2, in the case of a database
which is [made available to the public][put on the market] and the contents of
which are constantly updated, [if the maker of the database so chooses] the term
of protection by the right provided for in Article 10 shall expire, for each data
item, 15 years from the first of January following the date of insertion of that
data item.

Wow! That's a lawyer's dream - significant confusion. In addition, all the
proposals about "insubstantial changes" were deleted, it presumably being
considered that the texts above would somehow or other deal with that issue.

By the end of 1994 the EU, like every other political body in the world, was
hyping the Information Superhighway and the Information Society and making
elaborate plans not to be left behind in the rush. The EU constituted a
committee under the management of one of the Commissioners - the highest level of
bureaucrat in the EC (primarily ex-politicians who are appointed by the Members
States). In this case the Commissioner was the man responsible for IT and
Industry, Martin Bangemann, a German.

The so-called Bangemann Committee contained high-level business people with
interests in the superhighway and when they reported they said, amongst other
things, that the EU needed to get its act together on Intellectual Property (IP)
or the development of the Information Society would be retarded. This was enough
to galvanize the EC into action to get the Directive on databases agreed, so that
they could be seen to be doing something. As a German, Bangemann could be
expected to put some pressure on his ex-colleagues in the Presidency of the
Council to get a result before the end of 1994, when their term would be over.
However, the attempt failed. In a meeting of the Council of Ministers on
December 8, 1994, no political agreement could be found; in fact, there was not
even a proposal, it was only "mentioned." In other words the state of play was
described and the Ministers decided to continue the discussions in committee.

Where Are We Now?

On January 1, 1995, France took over the Presidency. There was some
indication that they did not see the Directive as urgent, but there was still the
pressure to do something vis a vis the Information Society, which was still a hot
topic on the political agenda, especially with a meeting of the Group of 7 (most
developed countries) on that topic, due to be held in late February.
Simultaneously, three new countries joined the EU officially and sat down at the
table where the discussions were taking place.

It is reported that one of the original difficulties, the difference in legal
status in UK and Irish copyright law and that of the "Continental" countries,
whereby the "author" has the basic right under Continental interpretation and the
UK and Irish "sweat of the brow" type interpretation, has been sorted out in an
agreed position where the author of a database's intellectual effort in the
selection and arrangement of the items shall be the only criteria for copyright
protection. Another element of that argument which may be removed as a result of
the new Member States arrival is the presumption that employees of database
producers have no rights as "authors" - the Continental view may prevail that
they have rights. This may mean some strange contractual variations for
free-lance abstractors! The question of including non-electronic materials under
the Directive is still open - under the (maybe) agreed basic definition a very
limited number of compilations would get real "new" protection, but since the
States cannot even agree on what should be included under the basic definition,
there is plenty of mileage in this one.

There is a view that the French presidency would go for a "minimalist"
approach to get the Directive through. The counter argument is that this would
offer no incentive to investors on the Superhighway. There the position rests.
Since this article will not be published until later in 1995 one cannot assume
that the situation will be the same at that time.

Conclusion

This article is quite deliberately subtitled "a lesson in interference." The
original discussion in 1990 clearly did not identify a serious problem in
protecting electronic databases under existing legislation. In the meantime GATT
(the General Agreement on Tariffs and Trade) and its TRIPS subset dealing with
Intellectual Property have been agreed. Another development since 1990 was that
some Member States of the EU began to question the "all powerful" nature of the
EC, especially when the Danish people voted against accepting the Maastricht
Treaty in its original form. The atmosphere surrounding the EC changed, what
were seen as "must do" type developments were now not so important. This
Directive is one example.

The original idea that the EC knew better than the Member States regarding
the protection of electronic data compilations has been diluted for political
reasons. The result may well satisfy those who feel that the EC tries to
interfere too much. In this case the interference was probably unjustified.
However, the outcome might well be a weak European Union situation concerning
protection of electronic data and worse an unclear legal environment. There is
nothing more disturbing than uncertainty when trying to decide on investments.
Those with the wherewithal to invest in new electronic databases may well go
elsewhere.

(copy for boxed sidebar on 2nd page of article)

EC Proposal, Council Directive on the legal protection of databases, February
1992

Eusidic on the "commercial" nature of "unauthorized" extractions:

[W]e are disturbed that the word 'commercial' is not defined. Although we accept
that it has a general meaning in the context of use for the purposes of commerce
we would contend that the arrangements made between producer and user of the
database would normally be expected to cover the concept of extraction for
commercial purposes and should be left to the contract between the parties.
There is an implication in the present formulation that it is permitted to make
unauthorised extracts provided they are not for commercial purposes. We must
assume this was not the intent.

Eusidic on "compulsory licensing" provisions:

The novelty of the provisions foreseen under this Article are such that their
application is likely, if not certain, to cause conflict between database
compilers and (potential) licensees. It is therefore important that the terms be
as unambiguous as possible

and

In the accompanying [explanatory] memorandum reference is made to rights being
granted for non copyright material, however this is not reflected in the words of
the Article.

EC response:

'Publicly Available' as mentioned here means 'available to everyone.'

[So, any database which is contractually restricted to a specific audience is not
covered. This would apply even in the case where a database owner or distributor
does not accept contracts from individuals, but only from "legal entities." This
is considered to be less than "everyone." However, the officials were quick to
point out that it would not be possible to assume new "rights" to yourself as
database producer or distributor by virtue of a contract.]

Eusidic:

Why were this Article and its rights included in the Directive?

EC response:

Quotation with acknowledgment of the source is an established practice and is
"good publicity" for publications, and

It is impossible to prevent all extraction.

[Therefore they preferred to create certain basic rules. They also said that
"commercial" meant all use which was not "home use" or "private use." They said
that it would be up to the Courts to decide on matters covered by this Article.]

EC on the term of protection of a database:

Insubstantial changes to the selection and arrangement of the contents of a
database shall not extend the original period of copyright protection of that
database.

Eusidic response:

We have considerable difficulties with the interpretation of this Article.
We are at a loss to understand how 'insubstantial change' will be interpreted
where the chronological addition of material to a very large database is not a
'substantial change' simply because the database is large and we must assume that
as the indexes are updated when new material is added to a database and the
indexes refer to the whole content of the database and the indexes are included
in the definition of 'database' then the copyright is renewed, in databases which
contain indexes, at each alteration of the index.

If this is true then later sub-Articles need to specify that the
'insubstantial changes' do not apply to the indexes. Also, if this is true,
indexed databases will be continually protected or at least until the indexes are
not updated, which discriminates in their favor vis a vis non-indexed databases.